Miliband right about fiscal autonomy

Ed Miliband is correct: the SNP’s proposals for full fiscal autonomy are a huge threat to public services and pensions in Scotland (your report, 11 April).

Over the past ten years Scotland has spent more than it has earned and the extent of that deficit, on average, has been greater than the rest of the UK.

Furthermore, future projections by independent experts suggest that this situation will worsen in the coming years.

It is due to this context that the independent Institute for Fiscal Studies (IFS) has determined that the SNP plan to replace the Barnett formula with full fiscal autonomy will cost Scotland £7.6 billion per year.

To put that in context, that is more than 50 times what Scotland spent on Trident last year or around £1,200 per Scot. This is a policy driven by ideology, not Scotland’s interests.

Nationalists suggest that if the oil price recovers, the deficit will reduce. However, it must be remembered that the oil price collapse has not yet been accounted for in the Scottish Government’s deficit estimates.

Furthermore, due to increased costs and subsidies, oil revenues are unlikely to ever fully recover even if the oil price does.

A second argument is that, due to the damage it would cause to public services, full fiscal autonomy would never be supported in an unlikely Labour-SNP coalition.

This is correct, but it also highlights how little influence the SNP will have over Labour.

There is one other scenario: the coming election looks too close to call and David Cameron is very keen to remain in Downing Street.

His government, perhaps in partnership with Ukip, will drive down public spending based on an ideologically driven agenda, so why would he not do a deal with the SNP to reduce UK public spending by £7.6bn by offering full fiscal autonomy?

So, the SNP expects full fiscal autonomy, in other words independence with the awkward bits left out, the bits they couldn’t cope with during the referendum, like currency, the EU, and defence – not what the majority of us voted for. Do our votes not count?

S D Barber

Holm Dell Avenue

Inverness

The recent opinion polls in Scotland make for disturbing reading for old Labourites like me. Pointing out that independence and/or fiscal autonomy would cause serious financial difficulties for Scotland, even though this is likely to be true, does not seem to be hitting the mark sufficiently well.

Maybe a more nuanced approach is required, firstly to remind people that it was Labour which brought about the Scottish Parliament in the first place and has a long-standing history of support for home rule.

Secondly, to acknowledge that devolving powers to Scotland, and perhaps to the other nations and regions of the UK, is a good thing in itself as it brings decision making closer to the people who are affected and would benefit.

Thirdly, that Labour would not agree to anything that would cause financial damage to Scotland.

Fourthly, that Labour would work with other parties and civic society to bring about meaningful and workable arrangements for more autonomy for Scotland.

Henry Kinloch Campbell

Park Crescent

Edinburgh

Your leader (11 April) asks where the money would come for fiscal autonomy. The simple answer is the same place as before.

No extra money is needed; talk of a £7.6 billion black hole is just scaremongering. There is no need to hurt Scottish pensioners as Ed Miliband seems willing to do.

Unless the tax and benefit rates are changed the overall position of the UK is unchanged. Fiscal autonomy makes it clear where the money is coming from and is the only sensible business way to run an international subsidiary. It cannot create a black hole, though it may shift it around the accounts.

The Barnett formula is not a magic potion which creates money for Scotland out of thin air; it just shuffles money around the UK, obfuscating its provenance.

It would have to be replaced by, say, the Sturgeon-Miliband formula and this could be even better for Scotland than Barnett depending on negotiations.

What it will do, of course, is make any cross-subsidisation explicit and encourage efforts to make any loss situation better.